According to a recent Fitch Ratings report, unexpected underwriting losses in 2008 have challenged the North Carolina workers’ compensation insurance industry’s financial support structures. The combination of increased competition (which generally leads to reduced rates) and fewer claims filed (which generally leads to higher rates) has thrown many North Carolina workers’ compensation insurance companies for a loop. Many NC executives in the industry vividly remember the mid-1990s, when an unusual string of bad luck sent blue-chip companies out of business and upset both the regional and national workers’ comp markets. Excessive competition and a sudden, surprising surge in claims drove that particular “perfect storm,” which forced companies to make good on policies that they had sold at reduced rates.

What do the latest numbers suggest about how future North Carolina workers’ compensation insurance claims will be processed? At this point, it’s too early to say. The North Carolina economy is still struggling to recover from the crippling effects of the national economic downturn. When the economy shrinks, employers take fewer risks and thus expose workers to less vulnerability. This theoretically should drive insurance prices down. At the same time, however, hard-pressed North Carolina entrepreneurs may be tempted to go without insurance or to under-insure to cut costs. This should theoretically drive prices up.

In any event, if you’re a North Carolina worker laboring in this environment, you should learn about your employer’s workers’ compensation policies. If you get hurt on the job and your employer does not have adequate insurance protection, you may not be able to get compensation owed to you – at least without a drawn-out legal fight.